Sunday, 31 October 2010

Putting the Clock Back

The debate about altering the clocks surfaces twice a year on the operational dates and then faces away. I am in two minds.

On the one had I am persuaded by the novelist, humorist and parliamentarian A P Herbert. He pointed out that, because of Britain's naval and navigational expertise, it was internationally agreed that the zero meridian should pass through our country, from which all others would derive their time and longitude. He argued that we should be proud of this and so stick to GMT throughout the year.

On the other hand, in Germany shifting the clocks back and forth is, I understand, referred to as "energy saving time." If this is accurate then, since I wear vests in the winter, only boil just sufficient water in the kettle, walk, cycle or travel by public transport as much as possible and do all sorts of other things to save the planet, I suppose I ought to be in favour of shifting the clocks on and back too.

But it is a faff. Perhaps a suitable compromise would be for businesses, factories, shops and schools to shift their working hours back or forward on a given date, so that from today, for example, standard office hours would become eight to four instead of nine to five. That would permit the rest of us to potter along as our biological clocks dictate and preserve the planet a the same time.

Saturday, 30 October 2010

Fewer Prisoners

Given Ken Clarke's welcome realisation that prison does not, after all, work, I suppose it makes sense to to cut the funding to the prison service, though it would perhaps be wiser to wait until the cut in numbers has actually materialsed before cutting the staff.

However, if fewer offenders are to be sent to prison there will clearly be more on probation, performing community service or otherwise compensating for their crimes. This surely needs more qualified and experienced workers to supervise and guide them. So a cut in funds to the probation service makes no sense at all.

Although I am no expert I understand that there are rehabilitation programmes outside prison that are very effective, but they do cost money. Failing to provide it not only means that non-custodial sentences are ineffective (and held to ridicule by the tabloids) but unreformed miscreants cost more money in the future.

The coalition is rightly trying to curtail short term thinking in the City. Long term thinking in the prison and probation services would be equally welcome.

Thursday, 28 October 2010

Not on the Buses

The Comprehensive Spending Review has, I believe, included a 20% cut in the subsidy to bus services. This is a retrograde step. Surely a government with a progressive and "green" transport policy should be promoting public transport and discouraging private transport.

The free bus pass for the over 60s has however been retained. Although I am a recipient of this bonus I would have been quite happy with the re-introduction of a token payment of say 30p or even 50p a journey. Several of my contemporaries, some far less comfortably off than I, take the same view.

Somehow the coalition seems frightened of upsetting the "grey vote." They should not be: we are tougher than they think.

Monday, 25 October 2010

A Pat on the Back

There have been no posts for the last few days as I have been on a walking holiday in Cornwall. Consequently I have missed the bulk of the news and comment on the Comprehensive Spending Review. However, I did catch one brief clip on television from the end of the speech and have seem the photograph republished several times in newspapers.

I have argued consistently in this blog that these cuts are economically unnecessary and ideologically driven, and that Liberal Democrats in government should distance themselves from them as far as possible. Some Liberal Democrats, even former radicals, have told me gravely that, because of Collective Cabinet Responsibility, that is not possible, though that same Collective Responsibility does not seem to prevent the Tories from not only distancing themselves from electoral reform, but allows them to campaign against it.

Be that as it may, Collective Responsibility does not require that, after having given a speech misguided in its purpose and harmful to the most vulnerable in our society, the Chancellor of the Exchequer should receive a pat on the back from the Leader of the Liberal Democrats, heirs to the party of both Keynes and Beveridge.

I suspect that picture will haunt us throughout this parliament, just as Nick Clegg's ill-judged remarks about "savage cuts" damaged our reputation in the general election campaign.

Monday, 18 October 2010

BBC World Service

For years I have cringed when British Politicians have claimed that this that or the other British institution is "The best in the world and the envy of he world" when it patently isn't. Paradoxically, the one institution that actually is the best in the world and the envy of the world is the BBC, and yet it its constantly under attack from the Tories.

Rumour has it that the World Service is to receive a cut of 25%. If this is true it is incredibly stupid. In the over-all scheme of things expenditure on the World Service is a flea-bite, and yet its reputation for comprehensiveness and impartiality does more for British prestige than all our possession of Trident, our seat on the Security Council, our allegedly Rolls Royce of a diplomatic service, our "punching above our weight" or whatever else our politicians like to boast about.

If I were in charge. rather than a cut I would give the World Service a rise of 20%, then leave them to get on with the job they do so well.

Sunday, 17 October 2010

Them and Us

From page xi of Will Hutton's introduction to his latest book"Them and Us":

The greatest danger to the new government is its repudiation of Keynesian economics in circumstances that demand more Keynesianism than at any time since the 1930s. There has to be a willingness to spend, borrow, reshape finance and protect investment at all costs.

Yet on the coming Wednesday, with Liberal Democrat support, the coalition government is to announce details of its proposals to do exactly the opposite. It is hard to avoid despair.

Saturday, 16 October 2010

Another World

Yesterday I did the first stint of some temporary part-time teaching of economics at a local School of Management. One of the perks of the job is a free copy of the Financial Times, which I accepted in order to pass the time on the bus-ride home, as I'd had to leave in the morning before my Guardian had been delivered.

The FT front page headline concerned a "tax blow" to "pension pots." Apparently the amount on which you can claim tax relief on contritions to your pension is to be reduced from £225 000 (per year!) to £50 000. and once your pension pot has reached £1.5 million you can't have any further tax relief at all. The majority of page three (I wonder why newspapers choose page three for the topic thought to be of major interest to readers) was devoted to illustrations of how this blow would "impact on high earners," along with a section on "how to avoid being caught out."

All the illustrations assumed a pension of 1/60th of salary for each year worked. My own teacher's (public service) pension is based on 1/80th of salary for each year worked.So much for the alleged gold plating.

When I finally got round to reading it I found that the Guardian devoted only one inside column (on page 34) to this devastating news. It included a comment from Brendon Barber, general secretary of the TUC, that even further reform is needed since, because of different rates of tax paid, "it costs a higher rate taxpayer just 60p to put £1 into their pension because they get 40p tax relief. But a standard rate tax payer ... gets only 20p relief, so it cost them 80p to save £1." Oddly, the Financial Times doesn't seem to have mentioned that.

In a "Viewpoint" article the Guardian's financial diarist pointed out that tax relief on pensions "costs" the Treasury £19 billion a year, and that 25% of it goes to the top 1.5% of earners. The FT doesn't seem to have mentioned that either.

This modest reform is to be welcomed and the coalition government is to be congratulated on not being quite so relaxed as Labour about people not only becoming becoming filthy rich,but also staying that way.

The intriguing thing to me is to wonder what exactly people do with these enormous pensions. The real purpose of a pension is to avoid destitution once one's working and earning life is over. Though far from gold plated, my own teacher's pension gives me a very comfortable lifestyle, and I can't really think what I'd do with more. Perhaps the real purpose of these enormous pension pots is to feather the nests of children and grandchildren, hardly conducive to promoting fairness, or even equality of opportunity, and therefore not a proper object for any tax relief at all.

Thursday, 14 October 2010

Still the Old Politics

What I believe to be the true condition of the British Economy was aptly summed up by a Professor Kushmer in a letter to the Guardian on 11th October. He wrote:

"There is no formal opposition to the flawed political narrative - that we are in economic crisis and in need of deep fiscal surgery...Forget that economists from Martin Wolf to David Blanchflower, from Will Hutton to Jospeph Stigliz oppose it - and that "the markets" are not calling for it. Forget that our debt- to- GDP level is historically low, that our tax is among the lowest of the OECD and that the calculation of the "fiscal deficit" is crafted, not magically given."

Yet again and again the coalition government justifies the abandonment of election promises with the flawed excuse of the "financial mess left by Labour." I have not read Vince Cable's speech to parliament on the raising of student tuition fees, but the clips I saw on television concluded with a robust jibe against the "party opposite" (and a pat on the back from David Cameron), as though alleged problems relating to tuition fees had not been raised before "the current appalling financial situation...which we inherited" became evident.

Clever lines about the road to Westminster being "littered with the skidmarks of political parties changing direction" may go down well in a debating chamber, but they merely reinforce the cynicism of the electorate and give substance to the view that politicians and parties are are all alike and none is to be trusted. The government should remember that their most urgent task is to restore respect for the democratic political process, and parliamentary knockabout and distortions of the truth are not the way to do it.

Equally Labour express indignation about the substance of Lord Browne's review , conveniently forgetting that it was they t first introduced tuition fees and they who appointed the Browne commission to review the situation. They have as yet expressed no clear alternative to the Browne proposals. Their leader supports a graduate tax but it is far from clear what the party's official policy is.

If we could afford free university tuition until 12 years ago, and France and Germany can each provide it for the equivalent of £160 and £845 per year respectively, I cannot see why we now need to charge around £7 000 a year. I believe there is no need for any tuition fees at all. This is perfectly feasible. As Sally Hunt of the University and Colleges Union points out (Guardian 12th October 2010) "(a) very modest increase in the UK's corporation tax rates to the G7 average would raise enough revenue to abolish tuition fees."

However, although there are problems with a graduate tax, as I acknowledge in an earlier post, I think it would be a perfectly acceptable for middle and high earing graduates to be required to pay a token extra tax, say 1%, in recognition of the benefits they have received.

Tuesday, 12 October 2010

On being thankful

I was away from home last week and threw away the papers, but think it was in Wednesday's Guardian that the following three items appeared:

  • Sales of tickets at the Commonwealth Games in New Delhi are not going very well, as they are too expensive for local people - the equivalent of about 70p, which is half a day's pay in New Delhi.
  • People on housing benefit in Central London will be forced to move out, away from relatives and friends, when the new cap on benefits is introduced.
  • A lady with an income above £44 000 a year moaning away that she couldn't possibly maintain a decent lifestyle if her child benefit were taken away.
What clearer evidence do we want of a divided world and a divided Britain?

It really is high time that those of us who are comfortably off (ie rich enough to be paying any income tax at all, never mind the 40% rate) learned to appreciate our good fortune. Below is the Prayer Book's "General Thanksgiving." Even if you don't agree with its religious sentiments it may help you develop a sense of perspective.

Almighty God, Father of all mercies,
we thine unworthy servants
do give thee most humble and hearty thanks
for all thy goodness and loving-kindness to us and to all men;




We bless thee for our creation, preservation,
and all the blessings of this life;
but above all for thine inestimable love
in the redemption of the world by our Lord Jesus Christ,
for the means of grace, and for the hope of glory.
And we beseech thee, give us that due sense of all thy mercies,
that our hearts may be unfeignedly thankful,
and that we shew forth thy praise, not only with our lips,
but in our lives;
by giving up ourselves to thy service,
and by walking before thee in holiness and righteousness
all our days;
through Jesus Christ our Lord,
to whom with thee and the Holy Ghost
be all honour and glory, world without end.
All
Amen

Monday, 11 October 2010

Anglo-French Walks

There have been no posts for the past few days as I have been walking in the Forest of Dean. The occasion was the valedictory ramble of Anglo-French Walks, a group formed by John Winter, then an "early retired" teacher of French, nearly 30 years ago, to enable English speakers wishing to improve their French and French speakers who largely seem to have no need to improve their English but are willing to put up with us, to walk together, practise our languages and generally enjoy each other's company. There have in the past been some 15 or so walks a year, each of a week's duration, held in both Britain and France, all organised and mostly led by John. Each walk usually attracted half a dozen or so of each "language."

Now John is within a few days of his 80th birthday and no longer sure he will be fit enough to lead another year's worth of walks. So for the last "official" walk, in the Forest of Dean, friends organised a "secret" augmentation when some 50 of us joined the dozen or so there for the whole week for the final day's ramble. and a farewell and thank-you dinner.

However, AFW II way arise from the ashes as some members are hoping to organise a "do-it yourself" programme on the internet. An example of the Big Society in action?

Tuesday, 5 October 2010

Withdrawal Symptoms

There was a great deal of huffing and puffing on the news programmes last night about the coalition government's proposal to withdraw child benefit from those who pay the higher (40%) income tax rate. Apparently (I say "apparently" because to me and the overwhelming majority of the UK population the level of income necessary to pay this level tax is a purely theoretical matter way beyond our everyday experience) this band kicks in at an annual income, allowing for personal and other allowances, of around £44 000 a year, and astonishingly, the median (that's the lot in the middle, there are as many above as below) income of this group is around £77 000.

Most people on the average income of around £25 000 a year or below see either level of income as luxury beyond the dreams of avarice. Big Issue sellers, unemployed people, and those on the minimum wage would be overjoyed to be receiving even the average wage.

I am frankly ashamed to live in a society where people living in the lap of luxury make such a fuss* about the loss of what they regard as an entitlement. This withdrawal will have only a minor impact on the lives of what the Daily Mail likes to call "middle England." Maybe they'll have to cut out just one of their foreign holidays, not replace the gas-guzzling 4 x 4 for another year, clothe the kids from Primark rather than Gap, or postpone refitting the kitchen with tropical hardwoods.

At the other end of the scale those facing the employment or poverty traps may suffer real hardship when obtaining a job or getting a rise in pay takes away benefits. Maybe it will do Middle England good to experience the feeling, even if only at a theoretical level.

*I suspect that the fuss may emanate from the media (Paxman et al ), anxious to generate as much dissatisfaction as possible from any situation, rather than from the people actually affected. If this is the case, my apologies to those in Middle England who are quite happy to play their part and experience some minor deprivations because "we're all in this together."

Monday, 4 October 2010

Gambling with the World's Food

As a dutiful member of the World Development Movement I filled in and sent to my MP their postcard to protest against the speculation which was forcing up world food prices beyond the reach of many in the Third World. The following is in response to Mark Oban's reply. Quotations are from his letter.

3rd October 2010

Mark Oban MP.,

HM Treasury,

House of Commons,

London,

SW1A OAA.

cc Mike Wood MP, cc WDM

Speculation in Food

My MP Mike Wood has very kindly forwarded to me a copy of your response to him (ref JMA720, dated 4th October, 2010) with regard to my concern regarding speculation in food.

In my view your belief that “speculation in (food) markets plays an important part in providing liquidity (the volume of trade in a market ) and that this liquidly helps these markets to function effectively” is both misguided and na├»ve.

As I understand it “liquidity” is more or less synonymous with “ready money.” In this sense wholesalers and similar intermediaries do help food markets function by having sufficient ready money to buy an entire crop from a producer and then sell the product on to retailers as it is required. The further away the process of buying and selling is from the grower and consumer the less useful is the exchange. The purchase of food “futures” and derivatives, simply in the hope of a financial killing, has little to do with making markets in vital commodities “function effectively.”

The World Development Movement is holding a conference on this topic in Conway Hall on the 26th October. I sincerely hope you will see it is part of your duty as the “minister responsible for this area” to attend and hear the facts from the point of view of those harmed by the process rather than those who profit from it. To further prepare yourself you will probably find it useful to read:

http://www.guardian.co.uk/commentisfree/2010/jul/22/food-speculation-starve-world-poorest

We in the rich world are rightly concerned by the harm that financial speculation by the banks has done to our economy, our level of employment, our GDP and our perceived ability to continue providing effective public services. Although our concern is great and occupying most of the attention of our political classes and our media this crisis has not, so far as I know, yet cost many lives. Since speculation in food will, it should occupy a far higher level of concern and we should put an end to it as a matter of urgency.

A Tobin-type tax on currency speculation has been proposed for many years. I suggest the government give urgent attention to the international imposition of a similar type of tax to curb all speculation.

Yours sincerely,

Peter Wrigley

Saturday, 2 October 2010

Council Tax Band Revaluation Fraud

The coalition government has postponed the revaluation of council tax bands on the totally false grounds that it would "penalise the poorest". Eric Pickles is reported to have claimed that, coming out of a recession, the government would not want to impose "an extra £1 600 of taxation on ordinary families."

This is nonsense and the government and Pickles must know it. There is no relationship between the total council tax a local authority raises and the banding values of the properties within its area. What the banding values do is determine how the payment of the tax is to be distributed. At the moment it is distributed according to property values in 1991. since when houses have increased in value. If they had all increased in value a the same rate, then the proportion of the total tax paid by each household would have remained unchanged. If in this period the value of some houses has increased proportionally more than others, then they will pay more and the others less, but an overall increase of £1 600 is ridiculous. If the total council tax levied remained unchanged then this would be a zero sum

A revaluation would penalise the poor rather than the rich only if humbler abodes had increased in value proportionately more than posh ones. If this is the case, then the simple solution would be to broaden the scope of the lower bands, A and B, add a few more bands above the present top H, and widen the ratio of the difference between top and bottom band payments above the present paltry three. Such a revision would be more equitable and sound less draconian than Vince Cable's proposal of a Mansion Tax

Of course, Liberal Democrats believe that council tax is a flawed and inequitable method of collecting local government revenues, and advocate a local income tax. Personally I am not totally sold on this idea, as I think it wrong to limit local government revenue to one source only. Local income tax along with that long standing Liberal demand for a Land Tax would be my preferred long term solution.

So bring on "site value rating," another good Liberal idea that has been ignored for far too long.

Friday, 1 October 2010

Big egos

In yesterday's Guardian Ed Milliband was quoted as saying that it would have been "fantastic to have (David) serving in my cabinet...He is my brother and as leader of my party my door is always open for him to serve in the future." (my italics)

But it isn't his party, it belongs to its members (who, incidentally, along with individual trade union members, voted for him by a massive majority of 175 000 to 145 000 - there is nothing "narrow" about his victory). The shadow cabinet, which is chosen not by him but by Labour MPs, surely belongs to all of us - it is that part of our constitution which, if it does its job properly, leads the task of holding our government to account and offering a viable alternative.

I can't remember the exact words, but Nick Clegg too, when first elected Liberal Democrat leader, used phrases such as "under my leadership the Liberal Democrats will..." and "I will lead the Liberal Democrats to..." Liberal Democrats pride ourselves on being a very democratic party, and our "front man" should be leading us in the direction where we, the members, and those who vote for us, want us to go.

Our politics will be healthier if we move away from this absurd emphasis on the personalities and characters of the party leaders and return to the custom of collective leadership where the prime-minister is simply primus inter pares, and the the opposition leader is simply first among a team of talented alternatives.